ENSURING THE QUALITY ASSURANCE PROCESSES ARE
CONSISTENTLY FOLLOWED REMAINS A SIGNIFICANT CHALLENGE FOR THE VOLUNTEER PROGRAM

Issued on September 15, 2009

Highlights

Highlights of
Report Number: 2009-40-128to the
Internal Revenue Service Commissioner for the Wage and Investment Division.

IMPACT ON TAXPAYERS

The Volunteer Program plays an
increasingly important role in achieving the IRS’ goal of improving taxpayer
service and facilitating participation in the tax system.It provides no-cost Federal tax return
preparation and electronic filing directed toward underserved segments of
individual taxpayers, including low-income to moderate-income, elderly,
disabled, and limited‑English‑proficient taxpayers.However, the quality assurance process needs
some improvements and is still not consistently followed.Incorrectly prepared tax returns can increase
the risk of taxpayers receiving erroneous tax refunds by not receiving credits
to which they are entitled or receiving additional credits for which they do
not qualify.

WHY TIGTA DID THE AUDIT

This audit was a followup to prior
TIGTA reviews to determine whether taxpayers receive quality service, including
the accurate preparation of their income tax returns, when visiting IRS
Volunteer Program sites.This review
included tax returns prepared at community-based
Volunteer Income Tax Assistance sites and Tax Counseling for the Elderly sites
sponsored by the AARP.

WHAT
TIGTA FOUND

The accuracy rates for tax returns prepared at Volunteer
Program sites decreased for the first time in five filing seasons. Of the 49 tax
returns prepared for our auditors by Volunteer Income Tax Assistance and Tax
Counseling for the Elderly sites in the 2009 Filing Season, 29 (59 percent)
were prepared correctly and 20
(41 percent) were
prepared incorrectly.During the filing season,
some volunteers did not consistently use the required intake and interview
process or perform a quality review to ensure that an accurate tax return was
prepared.Also, the IRS-developed intake
sheet was not effective to ensure that taxpayers received the additional
property tax deduction when appropriate.

Improvements are also needed to the quality assurance process
used to monitor Program effectiveness.Results showed that quality review procedures were not consistently
followed and did not always conform to applicable guidelines in place to ensure
the effectiveness of the tax return review process. In addition, a random sample of 43 of the 679
Post Reviews showed that 6 (14 percent) quality review files lacked sufficient
taxpayer information to support the reviewers’ conclusions.

WHAT TIGTA RECOMMENDED

TIGTA recommended that the Commissioner, Wage and Investment
Division, 1)
begin trending accuracy rates by site and tax topic to identify patterns and
concerns in which to focus education, training, and accountability; 2) ensure
that all new tax law topics and questions pertaining to filing status are
incorporated into the IRS intake sheet and augment the process for IRS approval
of locally developed intake sheets to ensure completeness and consistency of
information gathered from taxpayers during the tax return preparation process;
3) ensure that quality
reviews completed at the volunteer sites are selected by the IRS quality reviewer,
samples are random, and complete documentation is obtained; and 4) require that
quality review training be revised based on results of the 2009 Filing Season
to better ensure that tax returns are randomly selected and all quality reviews
are consistently supported by sufficient documentation.

IRS
officials agreed with three recommendations and partially agreed with one recommendation.The IRS plans to incorporate new tax law topics
and questions pertaining to filing status into the IRS intake sheet.In addition, it plans to augment the process
for approving locally developed intake sheets.To further mitigate the risk of incomplete or inconsistent information
gathering, the IRS plans to require for the 2010 Filing Season that all grant
recipients use its intake sheet.

The IRS agreed in
part with Recommendation one, noting that it captures an accuracy rate by tax
topic, but did not agree to trend accuracy rates by site because this would
increase the number of reviews conducted at each site.The IRS cited a lack of resources to
accomplish the reviews, particularly considering that it has more than 12,000
volunteer sites.However,
TIGTA does not believe additional reviews would be required.The IRS should capture the accuracy rate by
site for the reviews required to achieve a statistical sample.

READ THE
FULL REPORT

To view the report,
including the scope, methodology, and full IRS response, go to: